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Bed Bath & Beyond [GICS 25, Cara 100]
(BBBY: Yahoo Finance file)
(BBBY: StockChart chart)
(BBBY: Investertech chart)
(BBBY: ADVFN Financial Data)
(BBBY: ADVFN Financial Data)

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This chart compares the relative performance between BBBY and XLY, which is the Discretionary Spending (GICS 25) ETF. It shows that over 5 months and 12 months, BBBY has under-performed XLY (shown in blue).

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The stock is presently trading at $38.41, which is 17.6 times estimated 2007 earnings of $2.18, which I think is fully priced.

Given a slowdown in the consumer segment of the U.S. economy that is directly related to the housing market, I think the prospects of continuing to meet investor expectations will be difficult at best. There could even be disapointment ahead.

On July 18, BBBY hit a 3½ year low (since 1Q03) at $30.92. Today's close represents a 60-day gain of +24.2 pct.

With the Weekly and Daily RSI 7 at 70.0 and 82.5 respectively, the stock is technically over-bought.

I like the company; but I'll wait for the stock to come back to me. I think it will test 31 again in the next six months to a year, which is still a forward PE of 14.2, which is not unreasonable in a Bear market for this company.

Should BBBY move up to meet the 12-month UBS price target of $42, it would represent a total return of +9.3 pct (all price appreciation; zero dividend). The market risk in this environment is too great to buy today or to hang in if you have a position.

If I were a registered advisor (I'm not) and I knew the client, I'd recommend to sell/avoid. There will be a better day ahead to accumulate BBBY.